Shades of black, white, and gray in the Philippines

By
Paul Kreisberg /
July 26, 1988

HOW might a recent visitor to the Philippines describe that country? Brightly for the economy, somberly for politics and security, and with uncertainty for the Philippine-US relationship, particularly regarding military bases. The United States, with others, can help keep the economy moving, although a vast ``Marshall Plan'' approach is a dubious concept. But the main US contribution will be to avoid letting the bases issue seriously undercut US friendship for the Philippines. That will not be easy. Even pessimists are surprised at the economy's recovery. GNP growth has gone from -5 percent three years ago to 5.7 percent in 1986-87, 7.6 percent for the first quarter of the current year, and possibly 9 percent for the full year. Prices are rising but still under double digits. Labor unrest has fallen sharply, and remittances from overseas Philippine workers, in growing demand abroad, are rising.

Foreign capital is flowing in at increasing rates. A senior Japanese official in Manila expects several hundred million dollars of new Japanese money in the next year or two. US investment is also rising, but mostly from companies already in the Philippines. Chinese money - mainly Taiwanese, but also from Hong Kong, Singapore, and even mainland China - is a major new capital source.

There is ample room for caution. Servicing the $30 billion Philippine external debt eats heavily into national resources. Growth is unevenly distributed and has been fueled partly by volatile high prices for copra, sugar, and copper; construction for consumption rather than industry or basic infrastructure; and government pump priming in rural areas. Despite this, the manufacturers' share in GNP grew 11 percent last year, nearly 60 percent higher than the year before; tax collections are up; and government subsidies are down sharply. Capital that left the country during the last years of Ferdinand Marcos has slowly returned, and private-sector confidence is high.

The new land-reform law passed in June elicited strong criticism of the shelters it provided larger farmers. Some economists insist that the law provides needed incentives for such landowners to remain in farming and centers for local industrial and rural development that will benefit poorer farmers. The new law does, however, fall far short as a political symbol of President Corazon Aquino's concern for the poor and landless.

It is in this political arena that the outlook is least promising. The communist National People's Army (NPA) is growing, if more slowly than before. Local elections this fall will probably show that Mrs. Aquino's administration has not made much difference in politics and life at these levels. The Philippine Army remains divided over government policy toward the insurgency and critical of weakness in the government, despite Aquino's increasingly strong defense of strong action against the NPA.

The new commandant of the Philippine National Defense College says the military believes it has the right to overthrow even a democratic government that becomes unpopular through corruption, ineffectiveness, and incompetence. The Army's chief of staff acknowledges that such views are widely held but doubts that his officers would act on such premises. Aquino's opponents do not expect a coup attempt soon, but if one comes, they say it will be decisive and successful.

Corruption is petty compared with that under Marcos, but ubiquitous. Senate President Jovito Salonga shrugs this off, along with rampant pandering for political favors, as part of Philippine character and politics, to which the development and political process must adapt.

Philippine nationalism is clearly rising. The press is stridently critical of the US, primarily on the bases issue. Younger military officers - majors and below - have reportedly absorbed and parrot these positions, as many businessmen do. The conservative House of Representatives resists measures limiting US basing facilities that pass the more radical Senate, but there, too, sentiment is running slowly, steadily away from the US.

Political deterioration will ultimately halt economic recovery. Economic development will eventually ease political pressures. A sharp cleavage between the US and the Philippines over base negotiations will damage the political and economic environment in the Philippines. Secretary of State George Shultz is right that the US should leave the bases if they are not wanted.

But in the process both countries must leave the table as friends committed to strengthening stability and democracy in both the Philippines and East Asia, even if their judgments over the best ways of doing this differ.

Paul Kreisberg is a senior associate at the Carnegie Endowment for International Peace.